ECM / DCM - the hidden exit opp?

I know that on this forum the discussion is generally about people wanting to get from ECM / DCM to coverage IBD. And for those in IBD, the common exit opps discussed are PE / corp dev. But after people have spent time in coverage, isn't ECM / DCM a pretty great exit opp as well. It lets you make pretty much the same $$$ as you would in banking, (relatively) better hours and more predictability, less weekend work generally. Am curious why do people understate ECM / DCM vs. some of the exit opportunities?

 

Yes, a lot of people that start in coverage groups move over to ECM/DCM roles. Many of them continue to sort of specialize in the sector they know/another sector they've worked with a lot. A reason it isn't discussed much is because most people wracking their brain for exit opps are trying to leave banking. CapMarkets is still very much banking. The hours can still suck, the infrastructure and deals are broadly similar or the same. People who really want better hours exit to corporate banking or WM/AM. Those exits are also really common for mid-performers or guys who are just really burned out and want something easy where their QoL will be much better and they won't have to learn that much new stuff to do well. Many also go to consulting, where the hours are much better. They take a pay-cut but many are able to come in at decent levels and do okay, especially if they're moving to a cheaper city.

The reality of exit opps is that they are pretty much unlimited. Bankers do a ton of shit. The reality is that a top tier IB analyst can exit to almost anything if they hustle it. As @TNA said above, the reason that the only exits consistently mentioned are buy-side is that PE being the only good since it's even more prestigious than banking. People just like having things that are hard to get.

 

The clowns on this site don't realize that not all PE is the same. Most MM PE is a grind, you're doing the same analysis and your big payday is in carry. Better hope your fund crushes it.

Advice to kids. Get into the industry and ignore the advice here. The vast majority of kids have no clue what they are talking about. I've encountered so many funds and groups that no one talks about.

 

I am an ex-DCM guy who transitioned to a coverage group, I strongly advise against going to DCM.

Pros: -Comp: Great compensation (generally street for most places, or a slight discount to coverage) -Hours: Great hours (60-70 on average, minimal weekend work where you generally don't have to be in the office) -Environment: Trading floor environment is more interesting than the bullpen, though you lack privacy. -Lateral Opps: If you want to lateral to coverage, it is not that hard and you will get a lot of bites, though you will need a good story.

Cons: -Work: It seriously sucks. I came in with the idea that I would be doing more capital advisory, modeling, strategic thinking from a B/S perspective, but there really isn't much of that. In reality, the issuer's are generally sophisticated and make all the decisions on their own. They simply mandate you and you just start the process of executing the deal. There isn't much analysis or anything needed so so much of your time is spent just processing things like a glorified finance secretary (which is the same with other coverage groups, but CM is even worse). You really don't need to know much about the company to execute a deal. There actually is a great WSO thread where they mentioned that CM is a bastard hybrid of S&T and IB, where you are more market facing but don't really know that much about the markets/own your own risk and IB in that its transactions oriented, but you don't know know much about the company at all. -Skills: Really all you gain for the most part is expertise in executing bond offerings, you won't really understand companies, strategy, businesses, etc. that coverage people will have more exposure to (even if they are just writing crappy memos over and over again). You will not model. -Promotion: This varies from bank to bank, but my bank was awful in terms of getting an associate offer as a decent amount of people wanted to stay as it was a relatively chill job. The funny thing is there is so much turnover, but at the same time it is still so hard to get associate. -Exit Opps: This is really what made me move. No buyside fund is going to want you as you don't have much knowledge of businesses/strategy and don't do financial analysis (credit/valuation/modeling). It is easy to lateral to IB, but to lateral to say HF/PE is virtually impossible. To lateral to more strategic CF roles (CorpDev/Strategy) is extremely difficult too. There really isn't much exit opps externally, but internally it was a little better. As for the other poster, I would argue and say FI research, while possible, does not happen often at all. It is like saying ECM should let you become an equity analyst.

In conclusion, great pay/hours, but the lack of good exits/"real" finance skills/interesting work can hurt you significantly especially as it can be quite hard to move up in CM.

 

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